Osborne accused of ‘neutering’ banking watchdog

A member of an influential House of Commons committee has accused Chancellor George Osborne of trying to “neuter” the City regulator he established to police banks in the wake of the financial crash.

The Commons Treasury Committee announced on Thursday that it was summoning the chairman and acting chief executive of the Financial Conduct Authority to give evidence on January 20 on its controversial decision to drop an inquiry into the culture of banking.

The Treasury has denied any involvement in the decision by the independent FCA, and Mr Osborne said on Thursday he had “no fore-knowledge” that the probe was being scrapped.

But committee member John Mann said he believed the Treasury “directly and specifically” intervened to press the watchdog to take a softer line with the banks following the departure last summer of former chief executive Martin Wheatley, who was told the Chancellor would not renew his contract. He said he was hoping that Mr Osborne and senior Treasury officials will also be called to give evidence to the committee.

“Up to August, the FCA had a huge amount of work ongoing into culture within banks and how to make sure the culture was appropriate,” he said.

“In September, Martin Wheatley left and instantly all that work was changed - not just one piece of work, but lots of pieces of work that have been going on for some years - every single bit of it dropped.

“In essence, the FCA will have no point in existing.

“It’s my belief that the Government has interfered and I think our inquiry will prove that and hopefully prove precisely how they have interfered.

“The FCA hasn’t reached its own conclusions, it has been told what to do. It’s been told by the Treasury.”

The Labour MP dismissed as “weaselly” Mr Osborne’s insistence that he had no prior knowledge that the probe would be dropped, claiming that any pressure would have been exerted by “a nod and a wink”.